Options Traders Target 2 Volatile Tesla Rivals

Nio earnings are due later this week

Mar 4, 2019 at 2:13 PM
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While Tesla (TSLA) is making headlines again today with a weekend update on its Model Y SUV, rival Kandi Technologies Group Inc (NASDAQ:KNDI) is also in the news. Specifically, the China-based firm's joint venture with Geely Group, Kandi Electric Vehicles, entered a strategic partnership with China Resources and Ship Natural Gas for operating and maintaining government-accredited vehicles in its "Accredited Vehicle Alliance" ride-hailing initiative.

At last check, KNDI stock is up 4.1% at $8.07. The shares hit a 16-month high of $9.23 on Feb. 22, before pulling back to the $7.20-$7.30 region -- home to their 10-day moving average and a 50% Fibonacci retracement of their Feb. 20 bull gap, sparked by news of a big U.S. regulatory win. Year-to-date, the equity is up more than 122%.

kndi stock daily chart march 4

And while options volume remains well off the annual high hit on Feb. 20, trading is still accelerated today, with the roughly 2,400 calls and 1,300 puts around 1.4 times the expected intraday amount. The April 7 call is most active today, while the March 7 call is home to peak open interest. Buy-to-open activity has been detected at each strike, meaning options traders are betting on more upside for KNDI stock.

Fellow Chinese electric automaker Nio Inc (NYSE:NIO) is slated to report earnings this Tuesday, March 5. The shares were last seen trading down 3.8% at $9.68, but are holding above their Feb. 25 bull gap high at $9.09 -- when the stock rallied on a positive "60 Minutes" feature.

nio stock daily chart march 4

Pre-earnings options traders are making a beeline to NIO stock, too, with around 94,000 calls and 66,000 puts on the tape -- double what's typically seen at this point in the day, and volume pacing in the 98th annual percentile. Most active are the March 8 and 10 calls, though it's not clear if these positions are being opened or closed.

More broadly speaking, the March 8 call is home to Nio's top open interest position, with 49,035 contracts outstanding. Data from the major options exchanges points to notable buy-to-open activity here, with call buyers expecting NIO stock to maintain its lead above $9 through front-month expiration at the close next Friday, March 15.


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